Culture change: the new frontier for good governance

July 16, 2018 9:12 pm

Revelations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry have everyone in the sector talking about governance. However, ‘good’ governance is more than implementing the right systems, monitoring and policies.

As a business community, we are starting to talk about the importance of culture and a behavioural shift in the context of governance. In his Reflection on APRA Report on CBAHSBC Australia Chairman Graham Bradley highlights the regulator’s focus is shifting to include non-financial risks (i.e. operational, compliance, and conduct).

As we dive into this conversation, it is important to keep in mind that culture change and behavioural shifts need to be intentional; and it’s not the posters, slogans and internal marketing campaigns that matter most.

Leaders’ day-to-day interactions and habitual practices shape the culture of an organisation, which in turn drives the systemic forces that help or hinder good decision-making.

Why is cultivating a healthy culture hard?

Business sustainability is predicated on an organisation’s ability to balance seemingly incompatible goals such as meeting KPIs, achieving immediate financial results and ensuring the best outcome for a customer. This balance is a big ask. But that is exactly what we require people to do every day.

Daily interactions with leaders determine if and how this balance is achieved and shape the communication and behavioural patterns that inform decisions when leaders are not around.

Today’s leaders are tasked with realising expected business results while also dealing with the plethora of obstacles that threaten to derail achievement of goals. And must do this in a volatile, uncertain, complicated and constantly changing business landscape.

In the effort to get things done in a high-pressure, competitive environment, many leaders do not believe they have the luxury to take the time to ‘think deeply’ about what they are saying or how the policies they are putting in place are going to be interpreted by a range of different stakeholders now and in the future.

Likewise, even when they do have the time to ‘stop and think’, leaders tend to predict other people’s reactions in light of how they would respond rather than putting themselves in the shoes of team members who have unique experiences or are living with different pressures.

Mental biases and blind spots make it hard for leaders to pick up on the conditions that contribute to people doing the wrong thing. 

Two ways to equip your leaders to cultivate a healthy culture

There are many ways to assist leaders to cultivate a healthy and sustainable business culture. But two key tools that can make a difference are:

  1. Broadening leaders’ perspective to deepen self-awareness, even when the pressure is on
  2. Giving them tools to facilitate conversations that address the inherent tensions when dealing with competing objectives.

Self-awareness– knowing how language, actions, demeanour and unconscious biases impact others – has not been the mainstay of leader development, but it must become the cornerstone. This means we have to shift the way we develop leaders. To make progress quickly, we have to move away from a one-size-fits-all approach to a more personalised development plan that enables leaders to recognise the traps and situations where they are most vulnerable and how they can best leverage their unique experiences and expertise.

A first step is to create experiences that help leaders gain insight into how they are likely to respond (their biases) in a given circumstance. While there are some commonalities, every person has a unique way of responding when under pressure. Because many of our biases are internalised and unconscious, leaders often need an outside perspective to help identify patterns. Enlisting an expert who is skilled in identifying individual biases and their impacts on daily practice is useful as it provides a credible and more objective perspective. Likewise, it enables leaders to gain insights more quickly when the learning environment simulates their day-to-day environment.

Ultimately, leaders need to develop the ability to step back and see themselves in action. While previously a ‘nice to have’, the ability to move back and forth between ‘action’ and ‘reflection’ is essential for 21st-century leaders. Leaders who can recognise the effect of their behaviour on others are better able to evaluate their impact in real time and make changes if needed. This combination of insight and mindfulness better equips leaders to consciously choose a course of action that represents their own and the company’s values.

Integrating conflicting goals and perspectives is becoming another critical success factor for leaders. While it is difficult to ‘hold’ two opposing goals in mind at the same time, this capability can be built. Leaders must first acknowledge the inherent tensions in their employees’ stated objectives and then facilitate candid discussions to resolve these discrepancies. Skilfully doing this not only guides the current situation but it also sets a tone for employees to think through complexities when leaders are not around, and the policy does not exactly cover the issue.

Facilitating empathy involves both the ability to ‘perspective-take’ and the ability to understand and predict another person’s emotional response to a given set of circumstances.  These abilities have not always been emphasised. However, we now know that emotional acumen is as essential as financial acumen when it comes to ensuring people will do the right thing.

Creating ‘safe’ practice spaces, guiding leaders to actively reflect on their performance and providing accurate feedback helps them quickly recognise and respond to strong and more nuanced emotion.

Equipping our leaders with these skills is essential for cultivating a culture that constantly reinforces doing the right thing when the pressure is on, and the goalposts keep changing.

Dr Connie Henson, author of BrainWise Leadership, designs change leadership programs informed by the latest neuroscience research through her company Learning Quest.

For information about our new leader-led culture change program, ACUITY™ which is designed specifically for the Banking and Financial Services industry contact us at info@learningquest.com.au  www.learningquest.com.au

 

Photo credit: Rawpixel on Unsplash; Jacky-lo on Unsplash; Edgar-Pereira on Unsplash

 

Leave a Reply

Your email address will not be published. Required fields are marked *